The younger generation – heads of households in their 20’s – continues to drive growth and demand in the rental housing market. The overall rental rate in the US is at about 35%, but for those in the 25-29 year old age range, the rate is 65% and gets even higher with the under 24 year old set, at 77%.
What’s driving the rise in rentals? It boils down to three factors, according to Moody’s Analytics: weak income gains, favorable demographics and the foreclosure crisis. Still today, many households just don’t have enough money for a down payment for a housing purchase. Personal income gains are still weak, coupled with the fear of an uncertain economy makes renting more appealing. Pervious foreclosures makes it difficult to become a homeowner again, driving those to rentals, the next best thing to homeownership.
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